Despite capital improvement costs that cut into its bottom line, Bethlehem Steel Corp. said yesterday that profits continued during the third quarter, reporting income of $10.3 million on sales of $1.2 billion.

The company should stay in the black into next year, according to Curtis H. "Hank" Barnette, Bethlehem's chairman and chief executive.

"We believe that the very strong momentum of consumer spending and business investment, along with the growth in other world economies, will support high, continuing levels of steel demand through 1995," he said at a news conference in Bethlehem, Pa. "Demand for our flat-rolled products remains strong."

Mr. Barnette also said he expects recent price increases, ranging from 4 percent to 8 percent, to stay in place.

The earnings came in the company's fifth consecutive profitable quarter -- excluding the impact of a $290 million restructuring charge in the fourth quarter -- after three years of losses.

Net income for the quarter was down 66 percent from last year's third-quarter earnings of $30.7 million, or 22 cents a share. On a per share basis, the third-quarter earnings were break-even.

The earnings would have been stronger except for the fact that about $60 million, equal to about 55 cents a share, was sliced from Bethlehem's bottom line because of expenses associated with relining a blast furnace and rebuilding a coke oven at the company's Burns Harbor, Ind., plant.

"The interesting thing is if they hadn't had these costs, they would have the second-best profit per ton of any company in the industry," said Charles A. Bradford, a metal analyst for UBS Securities Inc., a New York investment banking firm. "Next year, the numbers should look a lot better."

Having anticipated the results, Wall Street reacted mildly to the company's earnings. Bethlehem's stock rose 25 cents a share to close at $18.375.

The nation's second-largest steelmaker enjoyed a 16.9 percent increase in sales in the quarter. Demand continued to surge for steel from Burns Harbor and the company's Sparrows Point plant in Baltimore County, which has about 5,300 employees. However, the company's adjoining shipyard in Baltimore, which has 600 workers, lost money in the quarter because of a weak ship repair market. But conditions have improved recently and about 13 ships are scheduled for work between now and April, a company spokesman said.

With the shutdown of the main blast furnace and coke ovens at Burns Harbor during the capital projects, the company has had to spend extra money to buy coke from other suppliers and import semifinished steel for use in its finishing mills.

These extra costs will continue through the year and will cut an additional $40 million off the profits in the fourth quarter, Mr. Barnette said.

But the projects should leave the key Burns Harbor plant much more competitive next year, when no major capital improvements will cut into profits, he said.